Lunchtime Links 4-8

Greenspan: Lehman would have needed $68 billion more capital (Nasiripour, HuffPo) Great find from Shahien. Greenspan said in written testimony that “with 15% tangible equity capital, neither Bear Sterns nor Lehman Brothers would have been in trouble.” 15% is a boat load. As of May 31st 2008, Lehman had just 4.3%. They’d have needed an additional $68 billion of capital to be at 15%!

DOC — FDIC rebuts WSJ op-ed (FDIC) This was in response to an op-ed yesterday that said FDIC has no experience resolving large institutions and therefore the resolution regime in the Dodd bill doesn’t make sense. I’m sensitive to arguments that FDIC may get in over its head, and yet, FDIC resolutions are the best way we know how to close failed financials. Losses are imposed on shareholders and creditors and the integrity of the financial system is protected.

FACT #1: The official national debt now stands at $12.68 trillion — an amount equal to about 88.5% of all the goods and services our economy produces in an entire year.

FACT #2: Contingent obligations for Social Security, Medicare, Medicaid, veterans, and pensions now stand at an additional $108 trillion over and above the “official” national debt.

FACT #3: State, county and local governments are nearly $3 trillion in debt. Many can’t pay and will ultimately demand that Washington assume responsibility for that debt as well.

FACT #4: Total federal, state and local government indebtedness now stands at a mind-blowing $123.6 trillion.

FACT #5: Last year, Washington added $1.4 trillion to the debt. In this fiscal year, the Obama administration will add another $1.6 trillion!

FACT #6: In addition to funding the current trillion-dollar-plus deficits, the U.S. Treasury must borrow MORE each year to replace bills, notes and bonds that are maturing.

FACT #7: This record-shattering borrowing by the Treasury has resulted in a Mt. Everest of Treasury obligations being dumped onto the market, which naturally depresses bond prices and drives interest rates higher.

FACT #8: In a desperate attempt to keep interest rates low, the Bernanke Federal Reserve has created $1.25 trillion out of thin air to buy mortgage-backed securities … another $300 billion to buy U.S. Treasuries … and yet another $170.6 billion to buy other government bonds — a total of nearly $1.7 trillion in all.

FACT #9: From September 10, 2008 to March 10 of this year, Bernanke increased the nation’s monetary base from $850 billion to $2.1 trillion — a 250% increase in just 18 months.

FACT #10: Despite this massive money-printing, the yield on the benchmark 10-year Treasury note has STILL risen by more than one-fifth — from 3.2% to 3.86% — since December.

FACT #11: Because of this massive money-printing, the U.S. dollar has lost nearly 10% of its value in the past 12 months alone.